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Monday, September 10, 2012

Today I'm posting a little advice for someone who is close to me. If it sounds a little cryptic or strange to you, then it's not for you, though I hope it's useful anyway.

Simply by living a long time and paying attention you tend to learn a few things. Some of these things are universally accepted and become clichés. Others sneak up on you. Think about this one:

No beneficial change has ever been initiated by someone who is satisfied with the way things are.

Every invention, social change, and Great Idea was born in the mind of someone who is dissatisfied. If necessity is the mother of invention, then dissatisfaction is the father. Somebody was dissatisfied, and decided to make things better. Voila! Things get better. The bigger the dissatisfaction, the bigger the change, and the principle applies to everything from the invention of can openers to political revolutions.

But that's a little broad. Let's bring this a bit closer to home. There's a saying that, "behind every good man there is a great woman... nagging him on". There's more than a little truth to that bit of humor. Wives and girlfriends have had a reputation for nagging. And to be honest in my stereotypes, we guys do tend to be easily satisfied. So if you expect us to make things better around the house, or in our lives, you have to make things just a little uncomfortable for us. Not so much that we take off, but just enough that we have a strong desire to shut you up by giving you whatever it is you're nagging us for.

Now get this... even though we are perfectly content -- for ourselves -- to sit at home in our shorts, drinking beer and watching football, we will move mountains to give you what you want. We will dig ditches. We will plant flowers we're allergic to. We will invent. We will do odd jobs, work two jobs, and create NEW jobs, all because YOU are unhappy. We men don't have much in the way of instinct, but the desire to make you happy is alive and well. In a perfect world, you'd find the guy who just naturally does that without any prodding from you. But here in Reality we often need to find someone who's close, and then make a few tweaks.

But if a guy is sitting around the house, waking up at noon, with no job and no steady income... if he's getting his meals provided to him, and his bills paid for him... and if you fawn over him and tell him how great he is... and this is going on for months in a town where jobs are available (and they are)... do NOT expect any of this to change. Ever. And if he gets mad when this is pointed out to him, then understand that the situation is toxic, and I mean toxic for YOU.

It's said that love is caring for another person more than you care for yourself. You will find that this is only sustainable if it's true for both partners. Otherwise you will find yourself giving and giving until you're emotionally depleted and your love turns to resentment. That resentment may even turn to hate. You certainly don't want to start off in a relationship where that's likely to happen, and I'd like to help you avoid it.

Now, this may sound old-fashioned and a more than a little sexist, but it's ABSOLUTELY TRUE... he's young and able-bodied, and HE should be doing for YOU. HE should be doing whatever it takes to capture and hold your attention, and win YOU as a mate. And if that's not happening, then YOU have some responsibilities, too... your second responsibility is to nag.

TELL him he's under-performing, TELL him he's not doing enough, and when push comes to shove, TELL him to go home -- HIS home -- and try again when he's got his act together. Then HOLD HIM TO THAT. If he can make those improvements, then both of your lives will be better for it. You will no longer be dependent on other people for your basic necessities. When your parents someday die (and they will), then you will be the responsible adults that other people look to for comfort and support. And you can stop nagging. Life's pretty good. And he will have learned that he is a better man for having you in his life than he would have been without you.

If he cannot or will not improve, then you have learned something about relationships: it is possible to love someone who is not good for you; who will keep you dependent; who will sap your strength instead of adding to it. You do not need this. You do not want this. But you will HAVE this if you keep him complacent and satisfied with sitting around the house being told how wonderful you think he is anyway. So your third responsibility is to reject him. Because you love him, tell him why, but reject him nevertheless.

Because your first responsibility is to yourself.

And then look for the person who will take the steps necessary to look out for you and secure your future. If you want that person you will find that person, but not if you're taking care of some other woman's grown baby.

Sunday, September 09, 2012

Much of the rhetoric this campaign circles around tax "loopholes" for the rich. Rarely in a speech is it actually said what these "loopholes" are. Most of the people in the audience don't know jack about taxes other than they copy down numbers from a W2 onto a 1040 and add, subtract, multiply and divide where the form tells them. They don't know a loophole from a posthole; the term "loophole" is often being used for the sole effect of implying that there is illegal activity going on.

Wikipedia describes a loophole as "an ambiguity in a system, such as a law or security, which can be used to circumvent or otherwise avoid the intent, implied or explicitly stated, of the system."

The first thing to note about a loophole is that it is not a sign of illegality. Rather, it is a strict and literal adherence to legality (otherwise it's known as a "crime"). It means a law was written in such a way that strictly adhering to the letter of it leads to a consequence that was not intended by the lawmaker. For instance, my town has an ordinance requiring steps be built to exacting specifications for any entrance to a residence. This could be expensive for property owners when required even for entrances that aren't used. I once saw a landlord screw a sliding glass door shut and hang a sign on it reading, "this is a window". The intent of the law was code-compliant stairs at every working door. The result was one less working door. This is "exploiting a loophole".

The second thing to note is that many of the "loopholes" being talked about aren't even loopholes. They're intentional. For instance, a wealthy person pays a lower tax rate on income than a middle-class person. This isn't a loophole. This is because there is an intentional distinction in the tax law between "investment income" and "earned income". The government wants to encourage investment, so income from investments is taxed at a lower rate. Rich people are the ones with money to invest. Keep in mind that this money, if it just sat in a vault, would earn zero taxes for the government, because it would then be savings, not income! So the wealthy person invests his money, just as he's actively encouraged to do by the government, and then he's castigated by people (many of whom did the encouraging!) for "exploiting a loophole"!

So we hear scare stories that that the very wealthy (including President Obama, btw), pay a lower tax rate than their secretaries. Except, for the very wealthy, very little of their money comes from "earned income". Most of their money comes from investment income. If you're filthy rich you don't have to invest it. You can just put it in a vault, live off of it, and pay pretty much nothing for the rest of your life. We want that money in circulation where it can spur business and pay employees.

Getting that lower tax rate isn't shady business on the part of the investor... but crying about it is certainly shady business on the part of the politician. It's like raising the taxes on a carton of cigarettes to discourage smoking, then bitching at people who quit smoking "to avoid the tax". Or railing at people who put in solar panels because they get tax breaks for it. If you no longer want to encourage investments, then by all means raise those taxes, but don't blame investors for doing what you wanted them to do in the first place.

Of the ones that ARE actual loopholes, most rarely get talked about, because they're head-scratchingly complex. Like this one, reported in the Wall Street Journal. In my opinion, the best way to close all manner of loopholes is to keep the tax code simple. All the myriad if-then clauses in the tax code add up to an incomprehensible mess that's relatively easily circumvented. Simple, unambiguous rules are harder to avoid.

Personally, I have no problem with pinning the minimum tax rate of the super-wealthy at something higher than what the middle-class pays for earned income. (It would be best to do this tax-raising when the economy is booming, though. Don't let class envy allow you to shoot down the economic recovery. Ask your local economist.)

But please, if you're in conversation with me, before you bandy about the scary L-word in scary all caps, make sure that what you're talking about is an actual loophole, or better yet, piss off. You getting upset about government-encouraged behavior simply makes you look foolish. And decrying the exploitation of loopholes as if it were a criminal act will get you limited sympathy; being limited to unemotional agreement that the loophole should be closed, with zero agreement whatsoever as to the moral or legal culpability of those who followed the letter of the law to its exacting conclusion. The Congress is full of lawyers; if they can't write a better law than this, vote them out. I already agree that loopholes (unintended consequences) should be closed, and you don't need to make yourself look silly to get my agreement on that non-argument.

Talking Points Memo (TPM) reports on "The Gobsmacking Drop In Government Spending Under Obama". In it we're told that the conventional wisdom that Obama is for big government "faces perhaps its starkest rebuttal in new figures that reveal the sharpest decline of the last half-century in real federal, state and local spending during this presidency." Here's the graph:

This is true, as reported. But the devil, as they say, is in the details. The piece makes the mistake of glossing over some very important points in order to maintain its leftward lean. The first of these is that apples and oranges are being packaged together here. The Federal budget is a very different thing from state and local governments, subject to different pressures and different demands. The fact is that the majority of these spending cuts attributed to Obama were done at the state and local level.

A weak economic recovery is the reason. The Federal government is in a unique position. It literally cannot run out of money. At any time it needs more money it can simply issue Treasury bonds which must be bid on by primary banks and if not bought by them, must be purchased by the Federal Reserve Bank using money that is literally created out of thin air. The effect of this is that the Federal government simply asks for money and it gets it. Of course this is inflationary, but it's just a fact that the Federal government doesn't run out of money, despite political posturing to the contrary.

It's different for states and localities. They can't print their own money, and any borrowing they do isn't the borrowing of money created ex nihilo, it's from people that expect to get repaid. Many have balanced budget requirements which are inflexible. So if their means decrease, so do their expenditures. The fact that they have continued to cut jobs is simply an indication that their means have decreased. And for States (who cannot perform deficit spending, remember, unless they draw on savings), this means that tax income has decreased.

In a normal post-recession economic recovery, jobs in the public sector increase. This is because a recovery is typically strong, and the increasing prosperity leads to higher tax revenues, leading to the spending of those revenues by the states and localities that receive them. This is why you'll find that in times of economic recovery, government spending increases regardless of the party in power. This is typical of the charts that illustrate this:

Govt. Jobs growth. The spike in the red line is due to temporary census hiring.

The problem here is the misinterpretation of the chart. Some folks will hold it up as "proof" that Obama is for smaller government. This is a false proof. ANY president is looking for moderate gains here. Remember, increased tax revenue is what drives state and local government spending (the major component of these trend lines). This is only due to economic growth. You can get there by tax cuts or by deficit spending, and the results are largely the same. The Obama trend line illustrates poor economic growth.

Other folks argue that increased government hiring results in a stronger economy and that "if only" we hadn't laid off all those teachers and firemen we'd be in great shape today. Sadly, this is tail wagging the dog. They forget that states and localities are constrained to balance their budgets. They simply cannot go out and hire people they cannot afford. These trends, therefore, CANNOT be interpreted that way. Hiring follows recovery, not the other way around.

Chad Stone, chief economist for the liberal-leaning Center on Budget and Policy Priorities, has this to say:

“That saps demand still further aggravating a downturn and inhibiting a recovery. State fiscal assistance in the 2009 recovery act was largely gone by 2011 and state spending cutbacks continued due to pressures for budget austerity in many states and at the federal level.”

The goal of that state fiscal assistance he's referencing was to hang on to state government jobs until the recovery kicked in. Of course that didn't happen, and austerity measures HAD to take place in accordance with numerous state constitutions. This is WHY the graph at the top of this page shows that the spending cuts occurred AFTER the stimulus ENDED. The big factor isn't that Obama's cutting away at waste (though there may be some of that going on); it's that state governors, county administrators, and mayors have necessarily tightened their belts.

Personally, I don't think that's anything I'd be crowing about if I had the choice. But in an election year you have to spin what you've got, and Obama's campaign is doing their best to make lemonade out of a ton of lemons. They're hoping that you won't notice the sleight of hand.